Environmental headwinds buffet BHP in Colombia

In the wake of heightened environmental sensitivities to the activities of mining companies in Latin America, BHP Billiton's plans to expand a nickel mine in Columbia have been blocked.

In the wake of heightened environmental sensitivities to the activities of mining companies in Latin America, BHP Billiton's plans to expand a nickel mine in Columbia have been blocked.

Governments in the region from Chile to Argentina have forced several global mining companies to rethink mine applications in response to growing criticism over the industry's rising incursions.

Late last week, Colombia's environmental licensing authority, Autoridad Nacional de Licencias Ambientales, turned down a request from BHP Billiton's Cerro Matoso nickel mine to expand the site, according to wire reports. Cerro Matoso is the second largest producer of ferro nickel globally.

The request was denied because existing environmental permits cannot be modified to enable mining projects to be expanded, the environmental authority said.

The BHP Billiton project, which has operated for many years, produced more than 47,000 tonnes of nickel last year. The mine taps a laterite nickel deposit that is used as feedstock at a ferro-nickel smelter nearby. Most nickel is used to produce stainless steel.

At the end of 2012, Cerro Matoso renegotiated some aspects of its agreement with the government, including an agreement to lift royalty payments.

Last year, gold major Goldcorp was forced to suspend work on the $3.9 billion El Morro copper-gold project in Chile, following environmental objections.

Similarly, earlier this year another gold major, Barrick Gold, was forced to halt work on its planned $US8.5 billion Pascua-Lama project and was fined 8 billion pesos, about $US16 million, for "very serious" violations of its environmental permit, as well as a failure by the company to accurately describe what it had done wrong.

In Argentina, plans to develop mines in the Famatina area have run into stiff resistance from residents, with much of the planned exploration work in abeyance.

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